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There’s Gold In Them Thar Hills…

There’s still gold in them thar hills, and the best part is, today, there’s no shovel required to mine it. What gold, you ask? The opportunity mobile business banking represents for community financial institutions. With net interest margins harder to see than Wonder Woman’s plane – it’s invisible – and regulatory and compliance expenses growing like kudzu – it can grow 7 ft. in a week – mobile business banking is an opportunity that community FIs should jump all over – ASAP! Why? Because the opportunity is huge; it will bring in new business; it will reduce attrition; and it will generate fee income. If all of that’s not a gold mine, then I don’t know what is.

Did you know that Barlow Research estimates the potential revenue from fees and deposits in the SOHO (small office/home office) segment alone at $36.2 billion? These are companies who typically have ten or fewer employees – many of whom are likely already doing their retail banking with community FIs just like you. According to a 2013 study by Power Consulting, during which 839 in-person audits were performed by small business owners at 38 FIs across the country, nearly 40% of FIs audited never even mentioned their FI’s business mobile offerings. Have you told your potential SOHO accounts about your mobile banking solution? With Power Consulting estimating 12% of SOHO accounts could convert to business clients if their FIs mentioned mobile business solutions, now is the time to promote mobile business banking.

The mobile channel – smartphones and tablets – has officially become the channel of choice for consumers, and account holders of your FI are probably no exception. In fact, in 2014 access to the Internet via mobile devices eclipsed that of the desktop. The aforementioned Power study found that of the small businesses already utilizing mobile business solutions today, 32% of them access it two-three times per week. That’s two-three times per week you’re able to engage, cross-sell, upsell, consult and nurture your most lucrative clientele via the virtual channel. The same Power study found that 66% of small business owners would be likely to switch FIs for a superior mobile offering – 66%! When you consider the average small business relationship generates 50% more revenue than an “affluent” retail customer, mobile business banking will become a major focus for strategically minded community FIs.

In a case study by the CEB Tower Group, mobile banking customers were 53% less likely to attrite than non-mobile banking customers. When combined with mobile bill payment, they were 82% less likely to attrite. If mobile means sticky and mobile business means an opportunity to acquire new, highly-profitable accounts, then the case for mobile business banking as a serious – and profitable – attrition reducer is obvious. If further support is required, then consider the PPC Group found small business owners 40% more likely to consolidate their personal and business accounts at the FI currently serving their retail needs. A mobile business solution is the heavy-duty toggle bolt of attrition reducers – the proverbial golden handcuffs.

With the Feds continuing to chip away at interchange income and overdraft protection fees – and consumers more aware of FI fees than ever before – mobile business solutions are a beacon of light on the fee income horizon. Charging fees for business banking solutions has been an acceptable practice since the first online cash management solutions arrived, and mobile business solutions are no exception. A 2013 Aite Group study found nearly 30% of businesses currently using mobile business solutions pay their FIs more than $100.00 a month; it drops to 20% for those businesses not currently utilizing mobile offerings. And across all small businesses surveyed currently utilizing mobile business solutions, almost 50% currently pay their FIs more than $50.00 a month. Time equals money, especially for busy small business owners – Who wouldn’t pay for more time?

Mobile business banking could just be the most lucrative opportunity at hand for community FIs. Besides bringing in new business, retaining current business and generating fee income, executing on a mobile business solution will dramatically alter the way your FI is perceived in the markets you serve – it will position you as a leader and strengthen your brand. The best news of all: the market is virtually untapped. As of Q4, 2013, only about 30% of FIs with less than $10 billion in assets offered a mobile business solution. With your FI focused on growth through differentiation and your account holders focused on the freedom to bank anytime, anywhere, and on any device, the time is now to develop, deploy and advertise your mobile business solutions. After all, there’s gold in them thar hills.

Enjoy the blog? Visit our site again soon to read more from our industry experts—and to continue learning about trends in small business banking, read the ath Power Consulting report, “Small Business Mobile Banking.”

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